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Enrollment Surge In State’s Hardest Hit Fund Helps Reduce Foreclosures

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LANSING (WWJ) – The Michigan State Housing Development Authority announced this week it has received nearly 9,000 applications for foreclosure prevention assistance during the past five months since the launch of a new “Step Forward” publicity campaign.

The “Step Forward” awareness effort has helped contribute to a 16 percent decline in Michigan’s foreclosure activity in July from the previous month and a 42 percent decrease in foreclosure activity from July 2010, MSHDA officials said.

“We are pleased that MSHDA’s innovative programs are allowing distressed homeowners to avoid foreclosure,” Mary Townley, director of MSHDA’s Homeownership Division, said in a written statement. “We will continue to urge struggling Michigan homeowners who are collecting unemployment, have seen wage cuts or have had a medical emergency to visit the state’s new Web site stepforwardmichigan.org and submit their applications online.”

Michigan received its $498.6 million in federal funding for the Hardest Hit program in three allotments last year from the Troubled Asset Relief Program, administered by the U.S. Departments of Treasury and Housing and Urban Development (HUD).

MSHDA’s plan is designed to help homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition. MSHDA expects to help nearly 39,000 households in Michigan by 2014.

Three MSHDA programs are available to eligible applicants:

  • Mortgage-payment assistance for those receiving unemployment benefits of up to $750 a month for up to 12 months, or a total of $9,000. At the end of 12 months, homeowners still in arrears are potentially eligible for an additional $3,000 in assistance from MSHDA.
  • Up to $10,000 in funds for homeowners who have fallen behind on mortgage payments because of a temporary layoff or medical emergency.
  • Matching funds for principal reductions for homeowners who can’t afford mortgage payments because their income was cut. This would provide up to a $10,000 principal reduction from the state and one that is matched by their lender.

On March 1, 2011, MSHDA staff was reviewing or had approved only 1,114 client applications for assistance from the state’s Hardest Hit Fund. In mid-March, as part of MSHDA’s statewide education effort to promote the Hardest Hit program, MSHDA partnered with locally elected officials, banks, credit unions and nonprofit housing counselors to train staff, provide information and encourage their clients to visit MSHDA’s new Step Forward Michigan Web site for an updated list of mortgage servicers that are participating in the program.

In addition, MSHDA unveiled a series of public service announcements in newspapers and on radio and television stations across Michigan in March. The PSAs have continued to air throughout the summer and instruct at-risk homeowners to contact MSHDA to determine if they are eligible for the program.

Since the kick-off of the “Step Forward” campaign, MSHDA staff has received 8,968 Hardest Hit applications, for a combined total of 10,082 applications. The average amount of assistance per program is $2,682 for an unemployment subsidy, $4,900 for a rescue program subsidy and $10,000 for a principal curtailment, MSHDA records show.

“As Michigan rebuilds for a new future, one of the biggest challenges we face is keeping families in their homes while the job market recovers,” Townley said. “The partnership MSHDA has forged among the state, credit unions and banks provides a free crucial resource that helps bridge the financial gap for unemployed and underemployed borrowers.”

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